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ESDS Software Solution’s IPO proceeds are primarily earmarked for capital expenditure related to cloud computing and data centre infrastructure, indicating a focus on expanding its core service offerings. The significant anchor investor interest, particularly from domestic mutual funds, suggests confidence in the company’s business model and growth prospects within the cloud and managed services sector. However, investors should consider the competitive landscape in the cloud services market and the capital-intensive nature of data centre operations. The company’s reliance on technology infrastructure also introduces risks related to obsolescence and cybersecurity.
ESDS Software Solution has secured Rs 216 crore from anchor investors as it gears up for its Rs 720 crore Initial Public Offering (IPO), which is set to open for subscription on August 28 and close on September 1. The company allocated approximately 50.34 lakh shares to these anchor investors at a price of Rs 429 per share.
The upcoming IPO is structured entirely as a fresh issue of 1.68 crore shares, with no offer-for-sale component. The price band for the offering has been set between Rs 408 and Rs 429 per share, which values the company at approximately Rs 5,028 crore at the higher end of the band.
Tentative timelines indicate that the final allotment of shares is expected on September 2, with credit to demat accounts scheduled for September 3. The company’s shares are anticipated to list on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on September 4.
Mutual Funds Dominate Anchor Allocation
Domestic mutual funds were significant participants in the anchor investor portion, acquiring the majority of the allocated shares. ESDS announced that 41.25 lakh shares, representing 82% of the anchor portion, were allotted to six domestic mutual funds across 13 schemes, totaling Rs 177 crore.
Among the anchor investors, Motilal Oswal secured the largest allocation, with 10.25 lakh shares valued at Rs 44 crore. Bandhan Focused Fund and Bandhan Small Cap Fund were also substantial investors, receiving shares worth Rs 28 crore and approximately Rs 20 crore, respectively. Quant Mutual Fund invested around Rs 24 crore.
Other notable anchor investors included schemes from ITI Mutual Fund, JM Flexicap Fund, Samco Small Cap Fund, Bajaj General Insurance, Sanshi Fund-I, Meru Investment Fund PCC, Cognizant Capital Dynamic Opportunities Fund, and CP Capital.
DAM Capital Advisors and Systematix Corporate Services are acting as the book-running lead managers for the IPO, with MUFG Intime India serving as the registrar.
ESDS’s Cloud and Data Centre Focus
Established in 2005, ESDS Software Solution is a provider of AI-enabled cloud, managed services, data centre infrastructure, and software solutions. The company caters to a diverse client base across the BFSI (Banking, Financial Services, and Insurance), government, and enterprise sectors.
ESDS’s service offerings encompass Infrastructure-as-a-Service (IaaS), managed services, and Software-as-a-Service (SaaS). The company also provides a range of cloud solutions including colocation, public cloud, private cloud, virtual private cloud, hybrid cloud, community cloud, and GPU-as-a-Service.
The company operates five Tier-3 data centres across India, spanning over 75,000 square feet. Its managed services portfolio includes cloud and data centre management, cybersecurity, IT infrastructure management, network management, backup and disaster recovery, database management, and DevOps services.
ESDS possesses proprietary technology, notably its patented cloud autoscaling platform, SWARAJ Cloud. This platform has evolved into an AI-enabled cloud solution emphasizing data sovereignty, scalability, security, compliance, and artificial intelligence capabilities.
The company plans to utilize approximately Rs 576 crore from the IPO proceeds for the acquisition and installation of cloud computing and other equipment and infrastructure for its data centres. The remaining funds will be allocated towards general corporate purposes.
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